The government is preparing for an early byelection in former treasurer Joe Hockey’s safe seat of North Sydney, with nominations for the Liberal pre-selection already open.

Hockey will deliver his valedictory speech to parliament on Wednesday and resign soon after that. The byelection would be held before Christmas, so it is out of the way ahead of election year.

Although the seat is on a margin of almost 16%, it will be the first on-the-ground test for Prime Minister Malcolm Turnbull. This week’s Fairfax-Ipsos poll had the Coalition ahead 53-47% in two-party terms and Turnbull with 67% support as preferred prime minister.

The circumstances of the byelection contrast sharply with those of the recent Canning byelection, where the margin was 11.8%. The Liberals held that seat comfortably - a week after the leadership coup - despite earlier fears that it could be at risk.

In Canning, the vacancy was caused by the death of the former member, minimising resentment about having to go back to the polls. Hockey is leaving North Sydney to go to the plum job of ambassador in Washington.

The North Sydney campaign might also see some candidates and voters using the contest to register a protest against the Baird Liberal government’s consideration of the controversial issue of council amalgamations, which would affect the area.

The favourite for the Liberal nomination is Trent Zimmerman, a staffer to Hockey between 2004 and 2011, who is deputy CEO of the Tourism and Transport Forum, an industry body. He is a leading moderate, acting state president of the party, has served on the North Sydney council, and is supported by Hockey.

Tim James, a right winger who has worked as a federal and state Liberal staffer, including for John Howard and Hockey, and is now chief executive of Medicines Australia, has also been mentioned as a possible candidate for pre-selection. So has John Hart, chief executive of Restaurant and Catering Australia, who is chairman of the North Sydney Forum, a Liberal fund raising body that hit the headlines in media reporting about access to Hockey, leading to his suing Fairfax.

Leader of the House Christopher Pyne flagged the government’s intended timing on Monday, saying it wanted the electors of North Sydney to be without a member for as short a time as possible.

Ahead of the Hockey resignation and the announcement of the byelection, sources say Labor has made no decision about whether to field a candidate. Without any chance of winning there is little in it for Labor to do so, and it would cost money that might be better kept for next year’s election.

On the other hand it might see the chance of causing some mischief; also, for Bill Shorten to stay out could be portrayed as a sign of weakness.

From 1990 to 1996 North Sydney was held by high profile independent Ted Mack, who won it from then Liberal frontbencher John Spender.

Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.